Caribbean finance ministers meet with IMF on coronavirus aid

KINGSTOWN, St Vincent, CMC – Caribbean Community (CARICOM) finance ministers held talks Monday with the Director of the Western Hemisphere Department of the International Monetary Fund (IMF), Dr Alejandro Werner, as the region seeks relief from the economic impact of the coronavirus (COVID-19) on their individual countries.

Finance Minister Camillo Gonsalves told a news conference that while the Washington-based financial institution had indicated it would make US$50 billion available through its rapid disbursing emergency financing facilities for low income and emerging market countries, the Caribbean would still be placed at a disadvantage.

“The idea is to come up with an entire range of solutions and then allocate those solutions to the entities best suited to do that job,” Gonsalves said, noting that Barbados, for example, which is in an IMF programme, “can negotiate with the IMF one and one about getting a little ease here and …a change in their conditions.

“So if you are in an IMF programme you have one lever you can ask the IMF to help you with. As you all now St Vincent and the Grenadines has not ever gone to the IMF during this government’s tenure in office, so we don’t have that lever.”

But, he said the IMF has Rapid Disbursing Facilities that provides for countries that are not in an IMF programme, not in a structural adjustment programme “and not following none of their conditions, but there is money available if you have a disaster that creates a balance of payment problem.”

Gonsalves said that funds are usually applicable when countries face a natural disaster such as an earthquake or hurricane “and they have something called the Rapid Credit Facility and the Rapid Financing Instrument and those monies are almost immediately available in the case of a disaster.”

He said the funds are sometimes available at zero per cent, which is the one Kingstown is eligible for, but must be repaid over 10 years with a grace period of five years.

The other facility, which is for wealthier countries, has a fluctuating interesting rate and a shorter repayment period.

Gonsalves said that St Vincent and the Grenadines had already drawn down on that Rapid Financing Instrument in the past, most recently in the aftermath of the 2013 flood that caused widespread damage in the island.

“So we are still repaying that …and by 2023 we would have completed the repayment,” he said, adding that “the IMF has conceded they would allow that instrument to be used in the context of the COVID-19 pandemic.

Gonsalves told reporters that the Caribbean, and more so St Vincent and the Grenadines, indicated to the IMF meeting that while the region is grateful that the Washington-based financial institution was considering the Rapid Financing Instrument in the context of the COVID-19 pandemic, it must also consider increasing the quota to small island developing states.

 “If God forbids, our country or one of our neighbours was struck by a hurricane …while dealing with the COVID-19 pandemic that US$12 million drawdown won’t cut it.

“So we spoke to the IMF about them considering for these tourism dependent economies and increase in the Special Drawing Rights quota for these Rapid Financing Instruments, because St Vincent and the Grenadine is still repaying theirs, Dominic , which drew down their’s more recently, is still repaying theirs, so it limits what they can do.”

Gonsalves said that there is also “an immediate problem” facing the region with the tourism falloff, noting “if there is a global recession that comes out of this we would also have a lagging challenge down the road when the effects of the global slowdown affect us.”

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